Experts say it's putting consumers and the car industry under pressure.
One-third of new car buyers who are trading in their old vehicle owe more than that vehicle is worth, according to JD Power.
Last month, 6.65% of subprime borrowers were at least 60 days late on their car payments. That’s the highest delinquency rate since the 1990s, according to Fitch Ratings.
Almost 1 in 5 new car buyers in the fourth quarter took on a $1,000 or more monthly payment, according to the car shopping site Edmunds.
Several carmakers reported soft sales in the third quarter, and average loan rates for new cars exceeded 7%.
The application rate for any kind of credit dropped to just over 41% this year from nearly 45% in 2022, according to a Fed survey.
Just before the pandemic, the New York Fed found that about 9% of people had bills that ended up in collections. Now, less than 5% do.
The repossession industry is struggling with an enduring labor shortage, while 1.5 million car repos are expected this year.
Affordability has broken down, but the costs of not having your own vehicle are even higher for many. Marin Cogan of Vox explains.
Lenders are worried about increasing defaults.
